Riot Platforms' Energy Strategy Saves $31 Million in Production Costs

Riot Platforms, a Bitcoin mining company, has reported a significant reduction in production costs thanks to its energy strategy in Texas. In August, the company mined fewer Bitcoins than the previous month but received over $31 million in power credits, equivalent to around 1,136 Bitcoin (BTC), according to CEO Jason Les.

Massive Credits from Texas Grid Operator

Riot Platforms received an estimated $24.2 million in power curtailment credits under its contract with Texas grid operator Electric Reliability Council of Texas (ERCOT). In addition, it received $7.4 million from ERCOT's demand response program. Interestingly, the monthly credits surpassed the total credits the company received for the entire year of 2022, Les stated.

An Innovative Power Strategy

Riot Platforms' power strategy is based on three mechanisms, all supported by its long-term contract with ERCOT. By curbing operations and returning power to ERCOT during periods of unprofitable mining due to high electricity prices, the company receives power credits. Additionally, Riot competitively bids to sell ERCOT the option to control its electrical load and earns demand and response credits, even if ERCOT doesn't ultimately exercise that control over consumption. Les emphasized the importance of these credits, stating, "The effects of these credits significantly lower Riot's cost to mine Bitcoin and are a key element in making Riot one of the lowest cost producers of Bitcoin in the industry. Riot's power strategy is a key competitive advantage."

Supporting the Grid During Demand Stress

Riot Platforms' power strategy proved particularly valuable in August as Texas faced extreme weather conditions, with temperatures reaching record highs for consecutive days. The company's presentation noted that Bitcoin mining is one of the few industries that can reduce energy consumption and support the grid during times of high demand.

Strong Financial Performance

Although Riot Platforms posted a loss of $27.7 million in the second quarter of this year, it marks a significant improvement compared to the same period last year when the company recorded a loss of $353.6 million. The company is now planning to install thousands of new miners ahead of the Bitcoin halving.